"Iran has ceased to be a factor": The world admits that Tehran is out of the game
The American blockade is reducing oil exports from Iran and weakening its direct influence on the market, but fears of disruptions in the Strait of Hormuz continue to drive up oil and diesel prices.
The direct influence of Iranian oil exporters on the global energy market is gradually decreasing following the renewal of American restrictions on oil exports from Tehran. However, the decline in Iranian exports is not calming the markets: fears of damage to tanker traffic in the Middle East, and especially in the Strait of Hormuz, continue to exert upward pressure on oil and refined product prices.
Bob McNally, president of the Rapidan Energy Group, told CNBC that the renewal of the American blockade on Iranian oil exports has effectively halted a significant portion of Tehran's shipments. According to him, as a result, Iran has become a less significant factor in determining global oil supply. McNally specifically pointed to Kharg Island, Iran's main oil export hub, through which more than 90% of the country's oil shipments pass. According to him, operations there are no longer conducted at the volumes that characterized them in the past. "Iran has ceased to be a significant factor in the oil market in terms of its exports," he said.
Iranian exports are falling — the regional risk remains
According to a report on the Aram News website, the United States renewed restrictions on Iranian oil exports after the collapse of the talks between Washington and Tehran and the renewal of conflicts in the region. Washington eased maritime restrictions for about three weeks during the negotiations held in June and early July, but returned to a strict policy after the talks failed.
The result is a significant reduction in Iran's ability to supply oil to the global market. However, the focus in the energy market is now shifting from one question — how much Iranian oil is managing to leave the country — to a broader question: to what extent the crisis could damage the movement of oil and refined products in the entire region. At the center of the concern is the Strait of Hormuz, one of the world's most important shipping lanes for energy supplies. Any prolonged disruption in ship traffic in the area could also affect shipments not directly related to Iran.
Brent above $91 per barrel
According to McNally, crude oil futures prices do not necessarily fully reflect the geopolitical risk and the possibility of supply shortages. According to him, a sharper picture is emerging precisely from the refined oil products market — and especially diesel. He noted that the market has become "a little less optimistic" about the possibility of reopening the Strait of Hormuz quickly and stably. As shipping disruptions continue, the risk increases that the pressure already felt in diesel prices will eventually spill over into crude oil prices.
The numbers illustrate the pressure: diesel refining margins in the US and Europe climbed to record levels this week. In the US, the margin crossed the $100 per barrel threshold for the first time, reaching about $102 on Monday before retreating slightly to about $100. The price of crude oil also continues to react to the tension. The price of a barrel of Brent crude crossed the $91 mark this week, amid concerns about the security of shipping lanes in the Middle East and fading hopes for the resumption of negotiations between the United States and Iran.
This creates an almost paradoxical situation: on one hand, Iranian oil itself has less impact on global supply because smaller quantities of it are reaching the market. On the other hand, the conflict surrounding Iran continues to be one of the key factors raising the risk premium in energy prices. Therefore, the question that is currently occupying the oil market is no longer just how many barrels Iran is capable of exporting, but whether the crisis will damage the movement of oil and refined products throughout the Middle East.
If disruptions in the Strait of Hormuz continue, diesel and refined product prices may be the first sign of a real shortage — even before the pressure is fully reflected in the price of a barrel of oil.
